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Deutsche Post Misses Estimates as Strong Eur Slows Growth

Deusche_post

Deutsche Post AG, Europe’s largest postal service, said third-quarter profit and sales were hurt by currency swings, causing the company to miss analyst estimates.

Earnings before interest and taxes rose 7 percent to 646 million euros ($865 million), the Bonn-based company said today. That compares with the average analyst estimate of 649.6 million euros compiled by Bloomberg News. Sales fell 2.5 percent percent to 13.5 billion euros, while analysts had expected 14.2 billion euros. Without currency swings, sales would have grown 3.4 percent, the company said.

Deutsche Post focused on expanding its express-package and cargo businesses in emerging markets while seeking to stabilize the mail unit’s earnings, helping avoid most of the effects of recessions in Europe that has left freight companies struggling to maintain earnings.

“It will be a tough ride until the end of the year,” Chief Executive Officer Frank Appel said in a video posted on the company’s website. “We have the right measures in place, but nevertheless, since we don’t expect any upside from the economy, it will be challenging.”

The euro is the best performer among a basket of 10 developed-market currencies this year, meaning sales outside the region are lower when converted into the currency.

The shares have gained about 50 percent this year, the fourth-best performance on the 26-stock Bloomberg Europe Transportation Index, valuing the company at 30 billion euros.

Parcels Operation

Third-quarter Ebit at the letter-delivery division rose 6.1 percent to 261 million euros, Deutsche Post said. Ebit at the express unit rose 14 percent. Profit at the supply-chain business fell 9.1 percent, while rising 4.1 percent at the global forwarding and freight businesses.

Parcel volume in Germany rose 8.7 percent to 238 million units. To expand parcels operations abroad, the company will move the respective businesses in Belgium, the Netherlands, Luxembourg, the Czech Republic and Poland from the express into the mail unit.

Deutsche Post profit by 2015 will amount to 3.35 billion euros to 3.55 billion euros, the company reiterated. Analysts expect the measure to climb to 3.52 billion euros then, estimates compiled by Bloomberg show. This year, profit will amount to as much as 3 billion euros, the company reiterated.

Europe Tough

United Parcel Service Inc. (UPS), the world’s largest package-delivery company, on Oct. 25 posted third-quarter earnings that beat analysts’ estimates after carrying more U.S. shipments at higher rates. Three days later, TNT Express NV (TNTE) reported an 85 percent decline in third-quarter profit as its main European markets remained tough, prompting the Dutch package-delivery company to intensify efficiency measures.

The express-package, freight-handling and forwarding operations that use the DHL brand posted a third-quarter sales decline of 4.8 percent in the Americas and 1.8 percent in the Asia-Pacific region.

Time-definite express shipments handled daily rose by an average 8 percent, while air freight volume declined 5.3 percent and ocean freight slid 2.4 percent. Global freight and forwarding revenue fell 7.6 percent.

Clients continue to switch some shipments from air to cheaper sea routes, while the company suffered from weak demand by multinational customers from the engineering, manufacturing and technology industries.

Deutsche Post today lowered its forecast for capital expenditures by 100 million euros to 1.7 billion euros this year. Appel said there was no change in investment policy.

(Source: Bloomberg)